MANILA, July 30 — The global petroleum industry is bracing for a new shockwave after U.S. military strikes on Iran sent Brent crude oil futures above $90 a barrel, stoking fears of a supply crisis that could hit communities across Asia especially hard. The Strait of Hormuz, the narrow waterway between the Persian Gulf and the Gulf of Oman, is the world’s most important oil chokepoint. About 21 million barrels per day pass through it — roughly a fifth of the planet’s daily consumption of roughly 100 million barrels.
Iran controls the strait’s eastern side, and past threats of closure have historically sent prices soaring. For families in the Philippines, India, China and other Asian nations that rely heavily on imported oil, the timing is brutal.
The region was just beginning to recover from a prolonged stretch of high inflation, and now a sustained spike in crude threatens to push costs back up — for air travel, for food production, for the everyday logistics that keep supply chains running.
Chokepoint and history
The last comparable jump came in September 2019, after drone attacks on Saudi Aramco’s facilities briefly knocked out half of the kingdom’s output. Before that, the 1990 Gulf War saw oil prices double, though only for a short period. The U.S. Energy Information Administration, which tracks these fluctuations, closely monitors the current crisis.
Iran remains a major producer within OPEC, pumping 3.2 million barrels per day in 2024 — down from 4 million per day before sanctions were tightened. The United States, now the world’s largest oil producer at 13 million barrels per day, is not immune to price movements: global markets remain acutely sensitive to disruptions in the Middle East, no matter who leads in production volumes.
Closer to home for many Asian economies, the U.S. Treasury has imposed additional sanctions on Iranian oil exports, specifically targeting 15 entities involved in shipping. This adds another layer of pressure on countries like India and China, which are major importers of Iranian crude. Both now face diplomatic pressure to reduce their purchases, a shift that would force them to seek alternative — and likely more expensive — supply sources.
Spare capacity and a tricky puzzle
The OPEC+ group, which includes Russia, holds spare production capacity of about 4 million barrels per day. But a large chunk of that spare capacity sits inside Iran itself, a complication that makes compensatory supply difficult to arrange while sanctions remain in place. The problem is not just available oil, but getting it to market without triggering further geopolitical friction.
Insurance rates for tankers transiting the Persian Gulf have already risen, adding to the cost of every barrel that passes through the strait. For smaller Asian nations that depend on spot-market purchases, these extra charges are passed directly onto consumers.
The broader economic consequences are still unfolding. Central banks across Asia and beyond may be forced to adjust interest rates again, complicating the recovery from inflation. Trade balances — already strained by higher import bills — could worsen.
And the day-to-day cost of moving goods and people, from jeepneys in Manila to three-wheelers in Dhaka, will likely climb. For communities throughout the region, the question now is whether the current tension is a temporary spike or the start of a prolonged period of high energy prices — a question that will depend heavily on what happens next in the Strait of Hormuz and in the diplomatic efforts to contain the fallout.
Sources
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